Petrobras-victim Lupatech sees its net losses shoot up 230% in 2011 and market questions its solvency

Lupatech, a provider of services to Petrobras, had a net loss of R$112.4 million in the fourth quarter, more than 1.5 times greater than the year earlier. For the whole year of 2011, the “damage” was 231% higher than 2010’s, at negative R$241.9 million. Piggy-backing on Petrobras has never been so difficult…

The company, which seeks to restructure itself due to fears about its solvency, ended in December with “tiny” debt of R$1.28 billion, 24% more than 2010. BNDES to rescue?

Itau said the following about the results:

“As expected, Lupatech reported weak results… Lupatech also announced that the light workover contract with Petrobras, representing R$1.4 billion, or almost 60% of the company’s backlog, was cancelled. Although the NPV of this project was close to zero in our view, we view the cancellation as negative, exposing Lupatech’s limited experience with services and increasing investor concerns over execution. According to Lupatech, there are no fines related to the cancellation with Petrobras, but there might be a legal battle …”